TransAlta Corp cuts dividend by more than a third to save money for shift away from coal

TransAlta Corp, the Alberta turbine, cut its quarterly dividend by greater than a third to save cash because it transitions toward gas and renewable power generation and from coal.

The quarterly dividend was cut to 4 cents a share from 18 cents previously, the company said in a release Thursday. Calgary-based TransAlta doesn’t expect to raise equity this year because the reduced dividend will “strengthen its balance sheet.” The utility intends to raise debt to fund US$400 million of obligations maturing in 2017.

“The actions we are taking today are prudent and proactive steps which will maximize our long-term financial flexibility,” Dawn Farrell, chief executive officer, said in the release. “We are following through now to ensure we can manage our transition from a position of strength.”

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TransAlta, that has a lot more than 70 power plants in Canada, the U.S. and Australia, said hello will negotiate with the government of Alberta to “make sure the company has got the certainty and capacity” to purchase clean power. The stock fell 1 cent to $4.36 in Toronto on Thursday and it is down 60 per cent previously year.

Alberta, the place to find Canada’s oilsands and the largest carbon polluter among provinces, will need to replace about 6,000 megawatts of coal generation capacity with cleaner fuel sources such as wind and natural gas to satisfy the government’s goal of 30 per cent alternative energy and a coal phaseout by 2030.